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Investors Russian to enter new safe haven … crypto

  • Digital coins are considered risky compared to traditional currencies but the latter now has greater volatility as geopolitical tensions rise.
  • Bitcoin up as much as 13% and Ethereum up 10% over the past day as the Ukraine conflict hammers Russian investors.
  • Russia’s currency, the ruble has hovered at just over 100 per US dollar in Moscow.

Cryptocurrencies are emerging as a ‘white knight’ for Russian investors being slammed by the conflict in Ukraine with the threat of a bear market in the former Soviet Union, and are fast becoming a safe haven and avenue for evading sanctions.

Russia’s financial markets have been in disarray largely due to sanctions imposed over its invasion of Ukraine, with its stock market remaining closed and trading volume on its sovereign debt vanishing.

Crypto prices are starting to spike after Russia’s ruble plummeted to another record low and Moscow was hit with new sanctions, sending Bitcoin up as much as 13% during the past day, and Ethereum up 10%, according to cryptocurrency tracker CoinDesk.

While digital coins are considered risky compared to traditional currencies such as the Aussie dollar, for Russians at least being hurt by sanctions imposed by the West, their conventional assets now have greater volatility as geopolitical tensions rise.

The country’s richest people, often referred to as oligarchs, are desperately seeking to shield or divest assets in the face of these sanctions as regulators globally hone in on business people close to Vladimir Putin.

The trading volume between the ruble and cryptocurrencies has climbed this week on Binance, which is one of the world’s biggest cryptocurrency exchanges.

Reports suggest that investors are desperately seeking to get out of the ruble after its value has devalued drastically when compared to the US dollar. The ruble has hovered at just over 100 per US dollar in Moscow, as the West froze the assets of Russia’s central bank, making it harder for Russia to mitigate the effect of sanctions on some of its biggest lenders and other companies.

As sanctions by the US and EU rely heavily on banks to enforce the rules, should a sanctioned person or business want to make a transaction denominated in traditional currencies such as the US dollar, it’s the bank’s responsibility to flag and block those transactions.

However, digital currencies like Bitcoin operate outside the scope of standard global banking, with transactions recorded on a public ledger known as blockchain, which in times like these is making digital coins a safe haven.

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